LONDON–(BUSINESS WIRE)–The High Court in London has delivered another blow to businessman Hamdi Akin Ipek, granting an injunction preventing him from using funds belonging to Koza Ltd, the English subsidiary of a publicly-listed Turkish mining conglomerate. Mr Ipek wanted to use millions of Koza Ltd’s funds to pay for a personal international arbitration dispute between him and the Republic of Turkey.
Following a 2-day hearing in the High Court in London on 10 and 11 February 2020, Mr Jeremy Cousins QC (a Deputy Judge of the High Court) ruled on Monday that Koza Ltd’s funds should not be used in support of the arbitration – in particular since it appeared the arbitration was being pursued based on a document of doubtful authenticity.
Mr Ipek had claimed he could not pay for the arbitration personally, and that without Koza Ltd’s funds it could not go ahead. At the court hearing, however, Koza Altin submitted evidence showing that Mr Ipek and his family members had been “shuffling” more than $20million between them and dealing in luxury yachts. The Court heard that Mr Ipek must have access to sufficient funds of his own to pay for the arbitration. The judge was unimpressed by Mr Ipek’s failure to disclose his assets, deciding that “Mr Ipek’s position remains shrouded with an uncertainty that Mr Ipek has done nothing to dispel” and that his refusal to cooperate to enable proper scrutiny of his asset position was “extremely unimpressive and unsatisfactory.”
This week’s ruling means that Koza Ltd’s funds are preserved pending trial.
Hugo Plowman, the Partner at Mishcon de Reya LLP representing Koza Altin, commented:
“This is an important decision and a clear message from the English Court that Mr Ipek must stop using Koza Ltd’s funds to fight his campaign against Turkey. My client is delighted with this result which follows our major win in the Supreme Court last summer.”
The decision is the latest in a series of defeats suffered by Mr Ipek in ongoing litigation over control of Koza Ltd.
Koza Ltd is the wholly-owned English subsidiary of Koza Altin, a publicly-listed mining conglomerate headquartered in Ankara. Koza Ltd was incorporated in 2014 and capitalised with £60million provided by its parent company, Koza Altin.
Over the course of the past 4 years, Koza Altin has taken action to stop these funds being used inappropriately. In 2016, the funds were frozen in order to preserve the value of the company pending resolution of the dispute. In 2017, Mr Ipek sought the Court’s permission to release Koza Ltd’s funds to finance a raft of personal litigation, including £3million for an international arbitration claim that he planned to bring against Turkey on behalf of another company owned by him and his family called Ipek Investments Limited. Koza Altin contested his application, arguing that this was an inappropriate use of assets ultimately held for the benefit of Koza Altin’s shareholders. Koza Altin also argued that the arbitration was founded upon a fraudulent share purchase agreement (the SPA) and, since it was a sham, the Court should not sanction use of frozen funds to pursue the arbitration.
On that occasion, Richard Spearman QC (a Deputy Judge of the High Court) decided that the authenticity of the SPA underpinning Mr Ipek’s right to bring the arbitration was “open to very serious doubt”. This was upheld on appeal in 2019 when the Court of Appeal concluded that Mr Spearman was “plainly correct” in his assessment of the authenticity of the document and that “once there is accepted to be a seriously arguable case that the SPA was a forgery… the court plainly should not lend its authority to a transaction when there is a real possibility that the transaction is a fraudulent one”.
In his judgment this week, Mr Cousins QC agreed with the earlier rulings. He confirmed that there “remain reasons for very serious doubt as to the SPA’s authenticity.” This, he said, is “highly material” to Mr Ipek’s prospects of success in the arbitration.
Last summer, another issue was settled in Koza Altin’s favour when the Supreme Court dismissed Mr Ipek’s claims challenging the authority of directors appointed by the Turkish Court to represent Koza Altin. The decision represented the culmination of almost three years of litigation on jurisdiction.
What is left of the claim can now proceed to trial in England where the Court will decide who should be able to control Koza Ltd. Koza Altin maintains that Mr Ipek is improperly and unlawfully seeking to prevent it from exercising its rights as the 100% shareholder of Koza Ltd. Koza Altin is seeking the removal of Mr Ipek as a director of Koza Ltd in order to protect Koza Altin and its assets for the benefit of its shareholders, and in accordance with its regulatory obligations.